Internal Fraud

While no fraud prevention program is 100% bulletproof, there are smart, pragmatic steps that can be taken, regardless of an organization’s size, to help minimize the likelihood and impact fraud can have on an organization.

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The average case of internal fraud in 2012 lasted a median of 18 months. Eighty-seven percent of those cases were committed by first-time offenders with clean criminal and employment histories.

How much damage could your credit union sustain in 18 months of unchecked fraud?

It’s a scary question but one which requires immediate consideration and action. There are a number of steps a credit union can take to minimize the risk of internal fraud and maximize the potential to quickly uncover it.

Start at the top: The first and most important step is for leadership to enforce a zero tolerance policy for internal fraud and create a culture that neither tolerates it nor discourages employees from reporting it. This type of directive and commitment is absolutely essential. Furthermore, it’s critical for employees to feel vested in the organization and understand and embrace the vital role they play in its success. This serves as an effective deterrent to engaging in fraudulent activity or looking the other way should they witness it.

Comprehensive fraud management system: The reality is that fraud can occur no matter how motivated and dedicated most of your employees are. It takes only one bad apple. That’s where the second step comes in with the development of a comprehensive internal fraud prevention system. It begins with clearly defined and documented policies and procedures that govern access to areas where potentially sensitive information such as Social Security numbers and account details are stored.

While no fraud prevention program is 100% bulletproof, there are smart, pragmatic steps that can be taken, regardless of an organization’s size, to help minimize the likelihood and impact fraud can have on an organization. These steps are invaluable; especially when compared to the damage not doing so can have on the organization.